Are you looking for a car loan? Then we have good news for you: Concept Car Credit is able to offer affordable finance and a great selection of models for a wide range of customers.
To us, it doesn’t matter whether you’ve experienced financial problems in the past. What we do care about is looking for a deal that presents you with manageable monthly rates and puts you firmly behind the wheel again.
Maybe you still have reservations about working with a bad credit car finance dealer. We understand. That’s why we have put together this article about car loans.
In it, you’ll find plenty of information on the ins and outs as well as the pros and cons of car loans. We’ll explain the possibilities at your disposal and where to best get car finance. Plus, you’ll get some insights on how applying for finance works at CCC.
A short history
There was a time when all car loans were considered a risk by default. If you couldn’t pay for a car in cash, the general consensus was that your best option was not to look for affordable finance – but to wait until you could.
A lot has changed since then.
In fact, finance is today the new standard mode of paying for a vehicle. Some may see this as an issue. But the simple truth is that car loans have allowed the car industry to grow exponentially for several decades. And ultimately, this growth has benefited almost everyone involved, from manufacturers via dealers to drivers.
Of course, not all recent developments are positive. So let’s start with an important question:
Do I really need to pay with cash?
As the Money Advice Service claims, “the cheapest way to buy a car is to fund all or part of it in cash.”
Personal finance websites like Mr Money Moustache have been sounding the horn of cash-payments for years.
Curiously, the advice seems to fall on deaf ears. The percentage of UK consumers paying for their car by credit has been steadily increasing for a very long time. It is still rising. Almost 9 out of 20 new cars are bought using finance. With almost 60% of all sales processed through dealers, the second hand market is increasingly looking similar.
Cash may still be the preferred payment method for private sales. But as more and more of these are moving online, these, too, are set to turn contactless soon.
So cash is on its way out?
Yes, it is. Despite experts warning against it for years, cash does not have a future in car finance. According to the Car Expert, “some dealers refuse to take any cash at all, while others have very strict limits on how much they will accept (usually less than £1,000) and very strict handling procedures for any cash they do take.”
But even if they did, cash is not the panacea some make it out to be:
- If you’re paying cash, you’re depleting your reserves. This can turn out to be catastrophic should you run into financial trouble shortly after buying the car.
- Paying for even a small part of the total sum by credit card – or paying for a car online via paypal – offers you buyer protection. This can come in handy if you experience issues with the car. Nothing of the sort applies in case of a cash purchase.
- In some cases, you can actually get better, cheaper deals when taking up a loan.
- Paying cash deprives you of the possibility to invest your money more lucratively.
Minimising the risk: Buying used
There is a way, however, to get the best of both worlds, less risk and great cars: Buying used. Second hand cars are a lot cheaper than new ones, so you can bring down the overall loan sum. If you combine this with a decent downpayment, you can get a great deal.
What’s more, used cars can feel just as great as new ones. They can even be more reliable, since you can study user reviews and know what you’re in for. Although dealer specials do not apply to pre owned vehicles, you should usually be able to keep your costs down to a minimum.
Now, the only thing to do is to find the best car loans for you.
Personal Finance: Reliable
There are two traditional options for financing a car: Personal finance with a bank and a dealer. Let’s take a look at the two in turn.
Personal finance with a dealer is straight-forward: When buying a car, the dealer offers to set up the loan for you as well. By combining this with a trade-in, this is extremely convenient. You do not need to contact different financial institutions to get a deal. You do not need to compare different offers and you don’t need to drop to your knees and beg.
Then again, precisely because it is so straight-forward and convenient, it makes sense to think dealer finance over. Convenience usually comes at a cost. Is the dealer really the best place to get a great car loan?
Banks: Friend or foe?
Many experts argue against this. In their opinion, there are many reasons for looking for third party car loans instead:
- With bank loans, you secure the financing before going to the dealer. This gives you a much stronger bargaining position.
- Banks specialise in finance, dealers specialise in making a profit on cars. In theory, this should make bank loans significantly cheaper.
- Because car dealers offer you package deals, the individual components of that package should be less attractive.
In real life, however, things rarely pan out that way. When it comes to new cars, dealers will work with manufacturers to offer extremely affordable finance deals. 0% deals are obviously your best choice.
But even with used cars, dealers will often be surprisingly cheap. This is possible because dealers actually go through banks when offering you a car loan. Because they are more creditworthy than you are and because they will combine separate loan applications into a larger one, they can get (far) better conditions with a bank than you ever could.
This is why dealers will usually have the edge over specialised financial institutions.
Bad credit: How to deal with it
We’ve now established that buying second hand is best and that dealers may be better suited to giving you a great car deal than third party finance institutions.
Here’s a spoiler alert, though: Banks will rarely do business with you if you have a bad credit rating. We can actually make that statement even more accurate by stating that banks will, barring the occasional exception, never do business with you if you have a bad credit rating.
Dealers, on the other hand, may be more lenient, especially if you offer them a nice trade-in. However, you need to be especially careful not to fall into the trap of dubious business men. If a deal sounds too good to be true, it usually is.
Here’s a bit of advice on bad credit car loans
If you’re looking for the best car loan for you, but you don’t have a picture perfect credit history, there are nonetheless a few things you can do to improve your situation:
- Improve your credit rating. We have written about this extensively in our blog (see car finance for poor credit history, for example). Although it won’t be easy, you can make progress even if your resources are scarce.
- Be selective when applying for personal finance. There is no sense in applying with as many banks or dealers as possible. Instead, only chose the ones that offer the best and most professional deals.
- When performing a credit check, make sure to only conduct a ‘soft’ one. These won’t register with banks or dealers.
- Absolutely stay away from payday loans or similar deals. They have their uses, but are not made for paying for something as expensive as a car.
At Concept Car Credit, we actually specialise in bad credit car loans.
Before we talk more about that, however, let’s quickly see if there are …
… some real alternatives to taking out a loan.
The simple answer to this is: Yes, but … Let’s take a look at them in turn:
Leasing has become both more professional and popular in the UK. It is easy to see, why: Leasing allows you to drive a different factory new car every 3-4 years and has great conditions when it comes to servicing the car. However, leasing is by far the most expensive of all financing options and the car never actually belongs to you.
Family and friends can also assist you with getting together the money for a car. Rates tend to be very low. In fact, many of these transactions are essentially 0% deals. If all goes well, they can be an incredible solution to a serious problem. There is, however, a double risk: You can end up not being able to pay back the loan and ruin your relationship with a loved one.
Online loans are the future of car finance, no doubt.
Right now, however, they have many disadvantages, just like most private finance deals:
- They’re still hard to get.
- Conditions may be better, but rates may actually be higher than with bank- or dealer financing.
- Plus, you obviously need to be Internet savvy to even consider this an option.
All in all, most of the alternatives don’t really strike us as being particularly attractive yet.
Calculating your best options
Let’s say you have set your mind on a particular car. You haven’t been able to substantially improve your credit rating, but you know you can afford to pay back a certain monthly instalment for a considerable period of time. How should you best approach this from a financial perspective?
For starters, don’t ever be too religious about one particular car. Especially if your finances are problematic, you should always be open for alternatives. And, as hard as it sounds, your dream car is never the best choice for a good finance deal.
Secondly, work out just how much you can truly afford each month. We have a few blog posts on the topic. Make sure you include all costs and allow for some wiggle room.
Finally, calculate the following points for each deal:
- The overall APR of the deal. This is the yearly cost of the loan expressed by a percentage rate. After you’ve worked out the APR, establish the total cost of the loan.
- The monthly instalment. With every dealer or bank, you can usually play at least slightly with the loan term and rate. A longer term will lead to a higher rate and vice versa. Use our online car finance calculator to work out the best constellation for you.
Once you’ve done this, compare different offers with each other and select the one that best fits your needs.
Car loans for you at CCC
At CCC, we specialise in credits for those with a bad credit rating. This means our loans may be slightly more expensive. But your chances of approval are much higher and we will work with you towards finding a monthly instalment that is realistic for you.
We know there are quite a few other car dealers making the same claims. Here are some of the things that set us apart:
- We actually have a showroom filled to the brim with incredible cars. You’re getting the full car buying experience and you’re never forced to take a car you don’t want or like.
- We add great cars almost on a daily basis. You can find many popular models with us and at many different price ranges.
- Concept is a serious car dealer and our customer reviews prove this. We don’t offer predatory rates, but try to find solutions that work for both sides.
We offer flexible solutions. As mentioned, use our car loan calculator to work out the rate/term that’s best for you. More often than not, we can accommodate our customers’ suggestions.
- We try to provide as many customers with a loan as possible, but we don’t just take everyone. This is for your own protection: If we sell you a car you can’t afford, you’ll eventually have to pay the price for that.
Do take a look at our digital showroom. If you see a car you like, get in touch with us. Our application procedure is extremely efficient and fast – you could get the green light within a few hours! We look forward to hearing from you.